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The new Merck & Co. becomes the world's second-biggest drugmaker overnight, and it's boasting a fat wallet to fund future deals. That's after the maker of vaccines and cholesterol and diabetes drugs bought Schering-Plough Corp. for $41.1 billion yesterday, leapfrogging from number eight to number two in the industry by revenue.

The company has about $8 billion in cash and investments and plans to keep investing in deals for rights to new drugs. Merck says combining the companies — and slimming down the staff of 106,000 employees — will save about $3.5 billion annually after 2011. The company also expects the acquisition to boost profits slightly by next year and is forecasting profit growth in the high single digits for the next several years.

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